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Posted by James McQuivey on February 27, 2013
Yesterday The New York Times picked up the hopeful news from the global music business that the revenue free-fall from $38 billion a year more than a decade ago appears to have stopped at $16.5 billion, leaving the industry at less than half its pre-digital size. This bottoming out of the revenues will come as some relief to industry executives who have wished and prayed for this day because, until it actually arrived, nobody knew for sure what type of revenues to expect in the future. That can make running a business pretty tough.
The music industry is everybody's favorite example of digital disruption done wrong -- including mine, since I covered music for Forrester several times. I have some classic stories I could tell to illustrate the point about executives who believed that suing customers was the path to profitability and so on, but I'll spare you those. However, as the author of a book called Digital Disruption, I actually owe it to the music industry for teaching me a few key principles of how to manage digital disruption:
We all owe a lot to the music industry. As the business that went through digital disruption in such a highly visible way, we can be grateful that we now know what not to do. And we also see in more recent decisions what to do -- from the VEVO music video service to the subscription models, like Spotify's, that the industry has finally embraced, we see that partnering promiscuously and experimenting rapidly will pay off. So even though the global music revenues are so much lower than before, what has emerged at the bottom of the revenue trough is a tougher, wiser industry that now has some solid footing on which to launch a digital counteroffensive. I wish them good luck.